US CONSUMPTION:US CONSUMER sentiment worsened sharply in early August, falling to the lowest level in more than three decades, even though retail sales posted the biggest gains in four months in July, separate reports yesterday showed.
US consumer sentiment, which hit its lowest since 1980 when the economy was in recession, fell on fears of a stalled economic recovery combined with gloom from partisan bickering over government debt, the Thomson Reuters/University of Michigans consumer sentiment survey reported. The preliminary August reading on the consumer sentiment index fell to 54.9 in early August, down from 63.7 in July, and has fallen for three months.
However, US retail sales climbed 0.5 per cent in July, the biggest jump since March, following a revised rise of 0.3 per cent gain in June, according to the US commerce department.
“People’s spending doesn’t always correspond with their mood,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut. “I doubt things are as weak as the sentiment readings suggest . . .”
US stocks were up about 1 per cent yesterday afternoon but the stock market was on track for its worst three-week decline since March 2009, when stocks hit 12-year lows. “The tumultuous last 10 days or so hasn’t given our core customer, the middle-income family, any reason to be more confident,” said Myron Ullman, chief executive of retailer JC Penney.
However, US retail sales in July posted the biggest gain since March, tempering fears of slipping back into recession. Consumer spending accounts for two-thirds of US economic activity, and the data indicates the third quarter was off to a decent start.
Excluding cars, sales rose 0.5 per cent, well above forecasts for a 0.2 per cent gain. The figures were bolstered by a 1.6 per cent jump in petrol station sales. Retail sales excluding cars, petrol and building materials rose 0.4 per cent.
Separately, it has emerged the Securities and Exchange Commission has asked credit rating agency Standard Poor’s to disclose who within its ranks knew of its decision to downgrade US debt before it was announced last week, as part of a look into potential insider trading, people familiar with the matter say. – (Copyright The Financial Times Limited 2011/Reuters)
